Business group, lawmaker disagree over impact of minimum wage hike

Starting Feb. 21, 2025, Michigan’s minimum wage will increase, after the Michigan Supreme Court turned back a challenge.

The court ruling of July 31 means businesses will have to pay higher minimum wages and paid sick leave, which will deal a blow to many small businesses and the economy, said Kathy Wagaman, the executive director of the South Haven Chamber of Commerce. The court ruled in response to a 2018 lawsuit brought by a coalition of groups that prompted legislators to enact new requirements.

“Higher costs to small businesses only means higher cost to the consumer,” Wagaman told CapCon. “It’s basic economics.”

The worst part of the change is mandating paid sick leave for seasonal and part-time workers, Wagaman said.

“There are many unknowns yet, and as most generally is the case, these laws require a lot of interpretation to get all the specific details,” Wagaman wrote.

South Haven, population 4,000, heavily relies on seasonal tourists who fish, kayak and visit the downtown area.

Residents of the Lake Michigan city have a median age of 61 years old and a median household income of $63,202, according to Census data.

The schedule for the minimum hourly wage and tip credit is as follows:

• Feb. 21, 2025: $10 hourly minimum wage plus the inflation adjustment. The tip credit will be 48% of the minimum wage

• Feb. 21, 2026: $10.65 hourly minimum wage plus inflation adjustment. The tip credit will be 60% of the minimum wage

• Feb. 21, 2027: $11.35 hourly minimum wage plus inflation adjustment. The tip credit will be 70% of the minimum wage

• Feb. 21, 2028: $12 hourly minimum wage plus inflation adjustment. The tip credit will be 80% of the minimum wage

• Feb. 21, 2029: The state treasurer shall calculate the inflation-adjusted minimum wage. The tip credit will no longer exist.

Two-thirds of restaurant operators said they would lay off employees if the tipped wage were eliminated, 94% of operators would raise prices, and one in five full-service restaurants would close permanently, according to a recent survey undertaken by the Michigan Restaurant and Lodging Association.

Rep. Kara Hope, D-Holt, welcomed the state’s top court mandating a higher minimum wage and earned paid sick leave for Michigan workers.

“The wage increase and paid leave laws will finally reflect the will of the people, and the court’s decision holds employers harmless as it only applies prospectively,” Hope said in a statement. “More money in workers’ pockets means more income to spend in the local economy; this benefits business, workers and the community as a whole.”